All posts tagged Corruption

Think corruption is costly to Asia’s economies? So is stamping it out.

The anti-corruption campaign launched by Chinese President Xi Jinping after he took power in late 2012 is worsening China’s economic slowdown, economists say, as fearful cadres pull back on everything from lavish banquets to building projects.

Similar phenomena can be seen in India and the Philippines. Read More »

–Bond Yields: James Hamilton says the Fed is only part of the story behind the rise in the 10-year yield. “When it does announce tapering, the Fed will try to reiterate that the rise in short-term rates will still not come until much later. But just as QE3 added emphasis to the declaration of a commitment to an extended period of low interest rates on the way down, ending QE3 will tend to detract from that message as we start to look at the path back up. And just as a weak economy was the primary reason the Fed embarked on QE3, a strengthening economy will be the primary reason the Fed ends it. And if the economy is strengthening, interest rates will be headed up, regardless of whether the Fed keeps buying bonds or not. It’s worth emphasizing that the recent rise in interest rates has been a global phenomenon, not just something seen in the United States.”

–Reducing Corruption: Jakob de Haan, Erik Dietzenbacher and Văn Hà Le argue that higher government wages reduce corruption. “Do higher government wages reduce corruption? This column argues that they do, but only in relatively poor countries. When a country’s poor, higher government wages reduce bureaucrats’ incentive to extract illegal incomes. However, as income per capita rises, higher government wages gradually lose their effectiveness in combating corruption.”

–Superman:Matt Yglesias says that saving people is a poor use of Superman’s time. “What we’re talking about, essentially, is the world’s greatest solar power cell. The earth’s yellow sun gives his eyes the ability to boil water, and his arms and legs can exert enormous amounts of force. In other words, he could be rigging up a plan to generate enormous quantities of pollution-free electricity! In the longer term, I’m pretty confident that solar power technology is going to improve the point where we don’t need Superman to play this role. But for the moment, Superman could take an enormous bite out of a world problem that’s much more significant than the occasional plane crash or factory explosion. The world needs cheaper energy and the world needs cleaner energy, and Superman could be delivering it.” Separately, a comic look at the same issue. Read More »

A rule of thumb among economists is corruption is bad for an economy. Respect for the rule of law is an intangible asset that forms a foundation for growth and development. Yet one of the more intriguing papers at this year’s American Economic Association meeting in San Diego suggests if you’re a company in a corrupt land, it pays to play fast and loose with the rules.

If you ask Maxim Mironov of the IE Business School in Spain, who presented his work to economists Friday morning, crime can pay for individual companies — in Russia at least. Mironov devised a method for measuring a Muscovite’s “propensity to corrupt” — give bribes, for example — using a trove of data on traffic accidents and traffic violations from 1997 to 2007. He then used this data to analyze the managements of tens of thousands of Russian companies. Read More »

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